This study presents a two-echelon supply chain network design (2E-SCND) model consisting of a vendor, a number of potential distribution centers (DCs), and end customers. According to the demand size, we classify the end customers into two sets of clients, big and small, which are replenished by direct shipping and routing policies, respectively. Facility location is a strategic decision that requires vast capital investment. Failure to account for shipping costs for potential clients can lead to a sub-optimal facility location model. Therefore, this study aims not only to determine the number and location of DCs, but also to consider the distribution plan for big and small clients. The problem belongs to the class of NP-hard problems since it contains the location-inventory problem (LIP) and the multi-depot vehicle routing problem (VRP), both of which are NP-hard. The study develops a genetic algorithms-based three-phase heuristic approach to resolve this problem. The experimental results indicate that the proposed algorithms can efficiently yield near-optimal solutions and demonstrate the trade-off among the related costs.
運輸學刊=Journal of the Chinese Institute of Transportation 29(1), p.97-121